Loss of Gross Profit
May cover the reduction in gross profit caused by lower turnover after insured damage interrupts normal trading.
Business Interruption Insurance
Protect the income your business depends on while you recover from insured damage.
Arrange cover for lost gross profit, continuing expenses and reasonable recovery costs based on your business and its risks.
Cover shaped around your business
Clear policy guidance
Support when you claim
What Is Business Interruption Insurance?
Repairing damaged property is only part of recovering from a serious incident. While repairs are underway, your business may lose sales but still need to pay rent, salaries and other fixed expenses.
Business Interruption Insurance helps place the business in the financial position it would reasonably have occupied had the insured damage not occurred. Cover is calculated using the selected basis, insured amount and indemnity period.
The Material Damage Requirement
Business Interruption cover usually responds only when an insured event causes physical loss or damage covered under the linked property policy. Extensions can broaden this trigger, but they must be specifically included.
What Can the Policy Protect?
The exact benefits depend on the basis of cover, policy wording and limits selected.
Continuing Expenses
Helps with insured fixed costs that continue while the business is recovering, such as rent and certain payroll expenses.
Increased Cost of Working
May pay reasonable additional costs used to reduce the interruption, such as temporary premises or equipment hire.
Recovery Period
Cover can continue during the selected indemnity period while turnover returns to the level expected without the loss.
When Could Cover Respond?
A valid claim starts with an insured event and a measurable effect on the business.
A fire damages your premises and trading must stop during repairs.
Storm or flood damage makes the insured location temporarily unusable.
Insured damage to essential machinery reduces production capacity.
Damage at a key supplier or customer affects your turnover, where the relevant extension is included.
Property Cover Alone May Leave a Gap
Property insurance may pay to repair or replace insured assets, but it does not automatically replace the income lost while the business cannot operate normally.
Business Interruption Insurance is designed to work alongside the relevant property cover so that physical recovery and financial recovery can be addressed together.
Choosing the Right Cover
A realistic insured amount and recovery period are essential. These four areas deserve careful attention.
01
Insurable Gross Profit
The insurance definition of gross profit may differ from the figure in your financial statements. The calculation should follow the policy wording.
02
Indemnity Period
Choose a period long enough to rebuild, replace equipment, obtain approvals, restore supply chains and recover customers—not only to repair the damage.
03
Business Trends
Allow for expected growth, seasonal trading patterns, inflation and changes that could affect turnover during the insurance period.
04
Dependencies
Identify key suppliers, customers, utilities, access routes and nearby properties that could interrupt your operations if affected.
What Is Generally Not Covered?
Exclusions differ between insurers. Always review the schedule, limits, extensions and policy wording.
Events Not Insured by the Underlying Policy
Business Interruption cover usually depends on insured physical loss or damage. If the underlying event is excluded, the resulting interruption will generally not be covered.
Poor Trading Unrelated to the Damage
Losses caused by reduced demand, competition, pricing decisions or other ordinary business conditions are generally excluded.
Insufficient Cover or Recovery Period
A claim may be reduced if the declared amount is too low, and payments cannot continue beyond the selected indemnity period.
Uninsured Extensions
Utility failure, prevention of access, infectious disease, cyber incidents and supplier or customer disruption may require specific extensions or separate cover.
Preparing for a Claim
Good records make it easier to demonstrate how an insured event affected turnover and expenses. Keep financial statements, management accounts, budgets, sales records, payroll information, invoices and details of additional recovery costs.
If an interruption occurs:
- 1Report the damage and potential interruption promptly.
- 2Take reasonable steps to protect property and reduce the loss.
- 3Record decisions, lost orders and additional expenses from the start.
- 4Work with the insurer and appointed specialists throughout the claim.
Frequently Asked Questions
Is Business Interruption Insurance the same as property insurance?
No. Property insurance responds to insured physical damage to items such as buildings, contents or stock. Business Interruption Insurance addresses the resulting financial impact on the business, subject to the policy terms.
Does the policy cover every reason my business cannot trade?
No. Cover usually requires an insured event under the linked property section. Some non-damage events or dependencies may only be covered when a specific extension has been selected.
What is an indemnity period?
It is the maximum period for which the policy can respond to an insured interruption. It should reflect the realistic time required to repair or replace assets and restore the business to its expected trading position.
Can salaries and rent be covered?
Certain continuing expenses may form part of the insured gross profit calculation. The treatment of wages, rent and other costs depends on the selected basis of cover and policy wording.
What information is needed for a quote?
Insurers may request recent financial statements, projected turnover, gross profit calculations, the required indemnity period, details of premises and equipment, and information about important suppliers or customers.
What should I do after an interruption?
Notify the insurer promptly, take reasonable steps to limit further loss and keep detailed records of damaged property, lost sales, continuing expenses and additional recovery costs. Claims remain subject to assessment and the policy terms.
Keep Your Recovery on Track
Tell us how your business operates and we’ll help you explore suitable Business Interruption cover.